Tracey Scotchbrook on Estate and Succession Planning in the New Superannuation Environment

Wednesday January 24, 2018

Tracey Scotchbrook is Director - Superannuation at PKF Lawler. Early in her accounting career Tracey had the opportunity to work with self managed superannuation funds, setting her on the pathway to specialisation. She is actively involved in the SMSF Association  ("SMSFA") and is the former WA Chapter Chair and National Membership Committee Member. Her accreditations include: SMSF Specialist Advisor (SSA) with the SMSF Association, CPA SMSF Specialist, and Charted Tax Advisor with the Tax Institute. Tracey is a regular presenter to industry professionals and trustees, commentator, educator, and writer. In 2009 Tracey was awarded the Praemium Scholarship by the SMSFA. Tracey Scotchbrook

We had the pleasure of sitting down with Tracey recently to discuss key challenges and opportunities facing the industry today.

You can find the full Q&A below.

Can you tell us a little bit about yourself (experience, your company, expertise, etc)?

I work with a broad range of clients assisting them with superannuation strategies, planning and advice, SMSF compliance and estate planning as well as employer obligations.

Often my work involves working in collaboration with the client’s accountant, financial advisor and/or lawyer. These engagements are particularly rewarding as we can achieve the best outcomes for the client.

PKF Lawler is an independent member of PKF International, providing a broad range of tax and accounting services to corporates, businesses and individuals. Our specialist services include corporate tax and advisory, audit, mining and resources, China business desk, property and development, research and development, and superannuation.

I am an active member of the SMSF Association, holding various committee roles since 2011. This has been and continues to be a very interesting and rewarding adjunct to my client work.

What are some of the challenges facing in terms of estate and succession planning for SMSF clients?

There is no fixed strategy as to what is the best solution for estate planning in superannuation. Importantly regular reviews and if need be updates will be required to ensure the right outcomes for clients. Particularly in light of the introduction of the transfer balance cap.

Challenges lie in determining what the best outcome is for clients looking ahead into the future. The timing differences in the application of the pension value to the pension transfer balance cap for reversionary versus non reversionary pensions can potentially result in very different outcomes. It will depend on the valuation of the assets and therefore the value of the pension interests at those points in time.

Under the old regime where benefits were reverting to a spouse, the proceeds could happily remain in the superannuation system. That has now changed for many clients. Amounts over the beneficiaries own pension transfer balance cap must now be paid out of the superannuation fund. This could be problematic for illiquid funds and those with a single significant asset such as property or units/shares in an unlisted investment.

What are the common mistakes SMSF practitioners usually make when they work in this area?

Identifying who are dependants for superannuation purposes and receive death benefits directly from the superannuation fund is a common issue. Particular problem areas include step children.

The calculation and application of the new pension transfer balance cap for children is confusing and tripping up advisors. Children do not necessarily receive the full $1.6M transfer balance cap as they are subject to a ‘modified’ transfer balance cap. Careful review of the specific circumstances in each case is essential to ensure correct application.

What are some of the big trends and developments you see ahead for the area?

The transfer balance cap means that for many clients their superannuation will no longer be able to be retained in their superannuation fund on death. Clients will be looking for solutions to ensure that the best outcomes can be achieved in transferring their superannuation wealth to their chosen beneficiaries in the most tax effective manner available to them.

In the search for alternative strategies we will start to see a greater use of testamentary or superannuation proceeds trusts. Indeed we will see more detailed plans that adopt a combination of strategies.

Transition to retirement pensions (“TTR”) have become messy. We have had unexpected changes preventing some TTRs from being reversionary pensions. We have the introduction of the new concept of a TTR in retirement phase. The ATO’s view stating that trustees do not have the ability to convert a TTR to an account based pension, allowing the original pension to continue once a condition of release is met is also contrary to view of some in the industry. This will be an interesting area to watch and one that advisors need to ensure that they keep abreast of.

Your topic focuses on ‘Estate and Succession Planning in the New Superannuation Environment’. Why is it important for practitioners to attend your session?

The impact of the superannuation changes on estate planning has potentially been silently lurking in the background. The changes to superannuation present a significant risk to advisors who are not reviewing their client’s estate planning under the lens of the new superannuation environment.

The introduction of the ‘transfer balance cap’ has triggered consequences for superannuation estate planning. With the unprecedented volume of advice work that faced advisors in the lead up to at 30 June 2017, many focused on ensuring that contributions were made and pensions appropriately restructured to comply with the changes.

TTRs present their own issues including limitations on the use of reversionary pensions.

A detailed and regular review of clients superannuation estate planning will be more important that before. It is therefore vital that advisors understand the issues and traps that can now arise.

What do you see are some of the key takeaways and benefits for practitioners for their practice from attending your session?

I was reading a post recently which suggested that binding death benefit nominations are no longer the best solution, that reversionary pensions are the best strategy after 1 July 2017. Estate planning for your superannuation is not a one size fits all. It is not a single strategy around the use of either binding death benefit nominations or reversionary pensions.

I look forward to debunking some myths and working through the superannuation changes and how they in turn will affect client’s estate plans. With the use of practical case studies I will work through the issues and highlight the traps that you need to be aware of alongside some of the strategies you can consider for your clients.

You can hear more from Tracey at the 3rd Annual Business Succession and Estate Planning Conference seminar, being held on Tuesday 27 February at the Parmelia Hilton Perth, Perth.


"The practical scenarios and how to deal with them was quite useful in applying to my practice"

Delegate - 3rd Annual Intellectual Property Law Conference, Sydney, March 2017






Read more testimonials